Kendrick Roberts v. Warren Bros.

On the 2nd of November, 1904, the appellee, a West Virginia corporation, sued out a non-resident attachment against the appellant, a Pennsylvania corporation. The attachment was laid in the hands of the trustees of the Johns Hopkins Hospital and sufficient funds were attached to cover the appellee's claim. Subsequently, the appellant gave bond, and the attachment was dissolved.

The declaration in the short note case, is in assumpsit and contains the six money counts.

The verdict and judgment after trial in the short note case, was in favor of the plaintiff and the defendant has appealed.

At the trial of the case, the appellant reserved seven bills of exception. Five of these relate to the rulings of the Court, upon the admissibility of testimony, one to the action of the Court in permitting an amendment to the plaintiff's voucher filed in the case and the seventh, to the refusal of the Court to grant the appellant's prayers.

The principal questions in the case arise upon the rulings of the Court on the pleadings, and we find it more convenient to consider them here.

The amended declaration, it will be seen, contains six counts, and to this the defendant pleaded five pleas.

The fourth and fifth pleas are those chiefly relied upon by the defendant corporation as a bar to the action, and they are as follows:

Fourth Plea. — And for a fourth plea the defendant says, that the plaintiff is a foreign corporation, and at the time of the institution of this suit in this Court, the said foreign corporation had not filed in the office of the Secretary of the State of Maryland, accompanied by a deposit fee of twenty-five dollars ($25), a duly certified copy of the charter, certificate or act of incorporation, under which it claimed the power to transact business as a corporation, together with a sworn statement from the president or other chief executive officer of such corporation, under its official seal, setting forth the amount of its capital stock authorized by law, and the amount actually issued, the amount of its assets and liabilities, the character of the business to be transacted in this State, designating the place or places of its principal office or offices, and the name or names of its agent or agents to reside in this State, with the place or places of their residence, upon whom legal process issued out of any Court of this State may, at any time, be served in any action, at the suit of the State of Maryland or of any county or incorporated city or town of this State, or of any citizen or citizens of this State, or of any corporation organized under the laws of this State. Fifth Plea. — That on or about the 13th day of September, 1905, the defendant was by the District Court of the United States for the Eastern District of Pennsylvania, at a session thereof held at the City of Philadelphia, in the said district, on the day and year aforesaid, regularly declared and decreed and adjudicated a bankrupt according to the true intent and meaning of the laws of the United States; and the defendant says that the said supposed indebtedness alleged in the declaration, if any such ever did accrue, accrued before the defendant so became a bankrupt as aforesaid, and was provable under said banckruptcy against the said defendant; and that the said plaintiff was duly and legally notified of said proceedings in bankruptcy, and the said alleged claim was duly scheduled by this defendant in its list of debts in said proceedings; and that on or about the 14th day of February, 1906, at the City of Philadelphia, in said district, the said defendant was by the order and decree of the said District Court of the United States for the Eastern District of Pennsylvania duly discharged of and from all debts owing by it and provable under said bankruptcy, among which debts was the one named and counted upon in the plaintiff's said declaration; all of which by the files and records of said District Court, true and attested copies of which are here ready in Court to be shown, will more fully appear; and the said District Court, at the time and place last aforesaid, further ordered that the said defendant be allowed its certificate of discharge as aforesaid, which said certificate was duly issued to the said defendant; and it brings the same into Court here, duly executed and certified; by all of which the said supposed indebtedness in the said declaration alleged, if any such there be, became and was and now is wholly discharged; and this the defendant is ready to verify.

To the fourth plea the plaintiff replied by way of replication:

That on January 10, 1905, the plaintiff fully complied with all the requirements of the law of the State of Maryland relating to foreign corporations and known as the Act of 1898, Chapter 270, and which requirements of said Act are set out in the averments of said fourth plea. And the plaintiff hereby tenders itself ready to bring into Court and show the Court the certificate of the Secretary of State of the State of Maryland, duly executed and attested, which shows said compliance by the plaintiff with said Act of 1898, Chapter 270, on said date.

And for a replication to the fifth plea, the plaintiff says:

That the adjudication of the defendant a bankrupt and its discharge in bankruptcy by order or decree of the United States District Court for the District of Pennsylvania, does not release or discharge the security on the bond filed in this case by the defendant to dissolve the attachment which had been previously issued and levied by the plaintiff on the moneys and credits of the defendant, which bond had been executed and filed in said case more than four months before the filing in said District Court of the defendant's petition to be adjudged a bankrupt. That the judgment sought to be obtained in this case against the defendant is solely and exclusively to bind the security in said bond filed to dissolve the attachment issued and levied on the moneys and credits of the defendant as aforesaid, and if a judgment is had in this case against the defendant, the Court will be asked by the plaintiff by its order to restrain the plaintiff from ever issuing an execution on said judgment against the defendant.

To the plaintiff's replications to these pleas, the defendant demurred, and upon the overruling of the demurrer, filed a rejoinder to the fourth plea, to the effect that the plaintiff had not complied with the requirements of the statute at the time of the institution of this suit. A demurrer to this rejoinder to the replication to the fourth plea was sustained, and a judgment was entered in favor of the plaintiff thereon, and the defendant failing to rejoin to the fifth replication a judgment was also entered for the plaintiff on the demurrer to this replication.

The questions raised by the fourth plea involves a construction of sections 139 and 140 of Art. 23 of the Code of Public General Laws, (1904).

By section 139, it is provided: "Any person or any officer of such corporation who shall presume to act as agent or employee of any such foreign corporation, or to open or continue an office for the transaction of the business of any such foreign corporation, before the provisions of section 137 have been fully complied with, and before said corporation shall have procured the aforesaid certificate from the Secretary of State, shall forfeit and pay to the State of Maryland the sum of one hundred dollars for each and every day he may act as such agent or employee, or may occupy such office for the transaction of such business, and it shall be the duty of the State's Attorney for the city or county in which such business is transacted, or is proposed to be transacted, to prosecute for and recover such penalty."

Section 140, provides: No such foreign corporation shall be permitted to maintain any action, either at law or equity, in the Courts of this State, until the provisions of section 137, shall have been complied with.

It is quite clear, we think, the Legislature did not intend that a violation of the statute should operate to destroy or avoid contracts made by foreign corporations before they complied with the law, but imposed a penalty by way of fine upon its agents or officers, who transacted business before they complied therewith.

In Walker v. Baldwin, 103 Md. 356, this Court, adopted the rule stated in 1 Wharton on Contracts, sec. 364, where it is said: "When statutory conditions are imposed on the conduct of the business, agreements made without observing these conditions, if no stigma of wrong is attached to the specific transaction and if it appears that the condition was imposed for merely administrative purposes, viz., the convenient collection of the revenue, it will not be held invalid." Banks v. McCosker,82 Md. 518; Coates v. Locust Point Co., 102 Md. 291.

The Supreme Court of the United States in Fritts v. Palmer, 132 U.S. 289, in dealing with a somewhat similar statute, held: "The fair implication is that, in the judgment of the Legislature, the penalty was ample to effect the object of the statute prescribing the terms upon which foreign corporations might do business in the State. If the Legislature had intended to declare that no title should pass under a conveyance to a foreign corporation purchasing real estate before it acquires the right to engage in business in the State and that such a conveyance should be an absolute nullity between the grantor and grantee, leaving the grantor to deal with the property as if he had never sold it, that intention would have been clearly manifested."

The decisions of many of the Courts of the States are in harmony with this construction of the statute. Bank v. Page, 6 Oregon, 431; Edison G.E. Co. v. Canadian Co., 8 Wash. 370;Toledo Co. v. Thomas, 33 W. Va. 566; Insurance Co. v.Brinkley, 61 Ark. 1; Garratt Ford Co. v. Vermont Co.,20 R.I. 187.

This question, however, has been set at rest, in our State, by sec. 69, ch. 240, of the Acts of 1908, which repeals sections 139 and 140, of Art. 23 of the Code, and provides, "every officer of any such foreign corporation which fails to comply with the provision of the preceding section and every agent of such non-complying corporation who transacts business for it in this State, shall be guilty of a misdemeanor and liable to a fine of two hundred dollars. Such failure shall not affect the validity of any contract made with such non-complying corporation, but no suit shall be maintained in any of the Courts of this State, by any such corporation until it has complied with the requirements of this article."

Nor do we think that by a proper construction of the 140th section, above cited, the plaintiff was prohibited from prosecuting and maintaining the suit, after a compliance with the Act, on January 10, 1905, two months after the institution of the suit.

The language of the statute, is, no such foreign corporation shall be permitted to maintain any action either at law or equity in the Courts of this State, until the provisions of section 137, shall have been complied with.

The statute does not forbid the institution or bringing of the action but prevents the maintaining of such action until the provisions of the law shall have been complied with. The meaning of the word maintain has been defined: "in pleading, to support what has already been brought into existence."

In Wetzel T. Ry. Co. v. Tennis Bros. Co., 75 C.C.A., 266, in passing upon a similar question the Court said: "The right of the plaintiff to maintain this suit is seriously controverted, because of its failure to qualify under the laws of the State of West Va. as a corporation to do business in that State. It is admitted at the time of performing the work, taking out the mechanics' liens and the institution of the suit, the corporation had not conformed to the law in this respect and that prior to the determination of and entry of the final decree, it had so qualified. We think, it is quite apparent that this omission on the part of the plaintiff does not operate to end a suit otherwise regularly instituted or to destroy a right in other respects validly existing, and the greatest effect so far as the Federal Courts are concerned, would be to suspend the prosecution of such suit until compliance was had with statute."

The cases of Toledo T. L. Co. v. Thomas, 33 W. Virginia, 571; Carson-Rand Co. v. Stern, 129 Mo. 381, are to the same effect.

The doctrine announced in these cases seem to us to be reasonable and correct, and is approved.

There was no error in overruling the defendant's demurrer to the plaintiff's replication to the fifth plea, herein set out. InHill v. Harding, 130 U.S. 702, the precise question here involved, was presented and the decision in that case, is conclusive, of the correctness of the Court's ruling in this case. JUSTICE GRAY, in delivering the opinion of the Court, said: "The question not then passed upon, and now presented, is whether, since he has obtained his discharge in bankruptcy, there is anything in the provisions of the Bankrupt Act to prevent the State Court from rendering judgment on the verdict against him, with a perpetual stay of execution, so as to prevent the plaintiffs from enforcing the judgment against him, and leave them at liberty to proceed against the sureties in the bond or recognizance given to dissolve the attachment, made more than four months before the commencement of the proceedings in bankruptcy. Such attachments being recognized as valid by the Bankrupt Act (Rev. Stat., sec. 5044), a discharge in bankruptcy does not prevent the attaching creditors from taking judgment against the debtor in such limited form as may enable them to reap the benefit of their attachment. * * * The judgment is not against the person or property of the bankrupt, and has no other effect than to enable the plaintiff to charge the sureties, in accordance with the express terms of the contract, and with the spirit of that provision of the Bankrupt Act which declares that `no discharge shall relieve, discharge or affect any person liable for the same debt, or with the bankrupt, either as partner, joint contractor, indorser, surety or otherwise.' If the bond was executed before the commencement of proceedings in bankruptcy, the discharge of the bankrupt protects him from liability to the obligees; so that, in an action on the bond against him and his sureties, any judgment recovered by the plaintiffs must be accompanied with a perpetual stay of execution against him; but his discharge does not prevent that judgment from being rendered generally against them." Wolf v. Stix,99 U.S. 1; Metcalf v. Barker, 187 U.S. 165; Black onBankruptcy, 94.

But it is earnestly insisted, upon the part of the appellant, there is no such practice in this State, as to warrant a special or qualified judgment, to wit, a judgment with a perpetual stay of execution and the Courts are without power to so render them.

We are unable to agree with this contention. A sufficient warrant, we think, can be found in sec. 14 of Article 26, of the Code of Public General Laws (1904), wherein it is provided, the Court shall give judgment in all actions according as the very right of the cause and matter in law shall appear to them, without regarding any matters of mere form, so as sufficient matter shall appear in the proceedings, upon which the Court shall proceed to give judgment, and it shall appear that the action has been commenced after the cause thereof did accrue.

When it appears a good and sufficient reason exists for a qualified judgment, as in this case, such a judgment can be rendered. 2 Evan's Harris, 345, 364; Peck v. Jenness,48 U.S. 612; Dor v. Childress, 88 U.S. 642; Hill v. Harding,supra.

Finding no error in the rulings upon the pleadings, we come now, to the objections, raised on the exceptions.

The first, third and sixth exceptions, are abandoned by the appellant in his brief and will not be considered.

The second and fourth exceptions present the identical questions, and will be considered together.

The witness Cross, was asked the following question: State, whether or not that work was done by the plaintiff on the Johns Hopkins warehouse under these plans and specifications has been accepted and enjoyed by the people for whom you did it. An objection by the defendant to the propounding of this question was overruled by the Court, and the witness permitted to answer, "Yes, sir." There was no valid reason for excluding this evidence. The suit here was properly brought in assumpsit and not in covenant, because the work covenanted to be done, was not finished and completed within the specified time, and it was entirely competent for the plaintiff to show, that the work when done was accepted and its benefits enjoyed by the defendant.Watchman v. Crook, 5 H. J. 240; Orem v. Keelty,85 Md. 345; Hackett v. Webster, 97 Md. 406; Jarrell v. Young,105 Md. 281.

The fifth exception, relates to the action of the Court, in granting leave to the plaintiff to amend the voucher filed with the attachment by striking out of the voucher an item of $1,378.86, and permitting the plaintiff to show that there was due and unpaid certain sums for work done and accepted by the defendants. The Code, Art. 9, § 28, expressly provides, that the affidavit, short note, declaration, voucher, pleadings, etc., etc., and all other papers in attachment proceedings may be amended in the same manner and to the same extent as the proceedings in any other suits or actions at law, etc. Blair v.Winston, 84 Md. 361; Booth v. Callahan, 97 Md. 318.

The suit was not on the contracts but in assumpsit, and the evidence was admissible for the purpose of showing the correct amount due by the defendants to the plaintiffs. In Orem v.Keelty, supra, it was distinctly said, by permitting the plaintiffs after knowing the work was not completed in time, to proceed and finish it, he waived all right to object on that ground, and the law implies a promise on his part to pay what the labor was reasonably worth.

The seventh exception embraces the rulings of the Court, upon the prayers. At the trial of the case, the defendant offered ten prayers, and all of them were rejected. The prayers were based solely on the sealed contracts and were property rejected.

The suit was in assumpsit and not on the sealed contracts. The plaintiff could only recover the reasonable value of the work. The ruling of this Court in Orem v. Keelty, supra. is directly in point, where it is said: "The defendant's prayers are drawn on the theory that the sealed instruments is the cause of action, but they are not applicable to the implied contract which became substituted in its place."

Finding no error in the rulings of the Court, the judgment will be affirmed.

Judgment affirmed, with costs.